OBI Tells Committee about Competitive Challenges
What happened: On Jan. 29, OBI’s government affairs team described some of Oregon’s most pressing competitive challenges to the House Committee on Economic Development, Small Business and Trade. Senior Policy Director Duke Shepard shared key findings of a 2024 report on the condition of Oregon’s manufacturing sector conducted by ECOnorthwest on behalf of the OBI Research and Education Foundation. Executive Vice President and General Counsel Paloma Sparks discussed a handful of worrisome trends that demonstrate Oregon’s declining competitiveness. Watch their testimony here.
Highlights: Oregon historically has excelled in manufacturing, and manufacturing jobs pay more than jobs in other industries across all levels of educational attainment. However, the growth of Oregon’s manufacturing sector has fallen behind that in most other states since the COVID pandemic. State Economist Carl Riccadonna recently declared that Oregon had entered a “manufacturing sector recession.” To increase Oregon’s appeal to manufacturers and other businesses, policymakers must first heed warning signs pointing to the state’s eroding business environment. These include its steady decline in business-focused rankings, including CNBC’s annual America’s Best States for Business rankings, which in 2024 deemed Oregon only the 48th most business-friendly state in the nation.
Why it matters: States compete fiercely for business investment. Unless Oregon becomes more competitive, Oregonians will lose job opportunities and state and local governments will lose revenue businesses and their employees generate. A thriving private sector makes for a thriving public sector.
What OBI is doing: OBI’s Oregon Competitiveness Agenda identifies some of the challenges Oregon faces and recommends policies to address them, from tax-code changes to regulatory reform. A few specific proposals that would improve the conditions described by Paloma and Duke include the creation of an Office of Economic Opportunity that would, among other things, help businesses navigate regulatory requirements; corporate activity tax relief for small businesses; and the expansion of Oregon’s research and development tax credit. OBI will focus much of its work this session on issues identified by the Oregon Competitiveness Agenda.
Papé CEO Dissects Unworkable Electric Truck Mandate
Background: The Oregon Environmental Quality Commission has adopted rules requiring dealers of medium- and heavy-duty trucks to sell a certain number of zero-emission vehicles in order to sell conventionally powered diesel trucks – or face massive fines. The so-called Advanced Clean Trucks Rule went into effect Jan. 1. Truck manufacturers and dealers have explained the many ways in which this mandate won’t work, including the high cost of electric trucks, their limited range and the near absence of charging infrastructure in Oregon. One consequence of the new rules, ironically, is that fleet managers will hold onto older and dirtier diesel trucks longer. The new rules all but guarantees years of air that is dirtier than it needs to be.
What’s happening: On Jan. 21, the Oregon Legislature’s Joint Transportation Committee held an informational hearing on the electric truck mandate. The hearing began with a presentation about the rules by Department of Environmental Quality staff. Following the presentation, industry representatives detailed the many ways in which the mandate simply isn’t workable. The committee heard from a representative of Portland-based Daimler Truck North America, an OBI member that manufactures Freightliner trucks as well as zero-emission vehicles. It also heard from Jordan Papé, president and CEO of the Papé Group, also an OBI member. Papé explained the limits of current electric truck technology, the impossibility of DEQ’s escalating sales mandate and, ultimately, the price impacts it will have on Oregonians. Watch his testimony here.
Legislative fix: Sponsored by Rep. Shelly Boshart Davis, R-Albany, and Rep. Ed Diehl, R-East Salem, and cosponsored by a bipartisan group of colleagues, House Bill 3119 would delay implementation of the Advanced Clean Trucks Rule until 2027.
Why it matters: Oregon businesses have long complained about the tendency of Oregon regulatory agencies to adopt rules that, even when workable, create unnecessary and unreasonable costs and compliance burdens. Over time, such rules have made Oregon less desirable to businesses, which in turn has limited job opportunities for Oregonians and revenue generation for state and local governments. The Advanced Clean Trucks Rule is the epitome of this tendency.
What OBI is doing: Modernizing the way in which Oregon’s regulatory agencies develop rules is the centerpiece of OBI’s Oregon Competitiveness Agenda, which you can read here.
Legislative and Rulemaking Update
UI Benefit Bill: On Feb. 6, OBI and other business representatives will testify in opposition to SB 916, which would allow workers to claim unemployment insurance benefits when they voluntarily walk off the job to go on strike. This is counter to the very intent of a system meant to provide benefits to Oregonians out of work through no fault of their own. There are many operational risks associated with the bill as well. If you are interested in submitting written or oral testimony, you can do so by clicking here and selecting “register to testify.”
Land Use Regulations: HB 3062 is an important early test of the Legislature’s willingness to consider the importance of jobs, especially in manufacturing of all sizes and types. This bill would create a new set of requirements under Oregon’s land use system for business on land near newly defined “sensitive areas.” Before an industrial use could be sited on this land, the business would have to prepare a “public health impacts analysis,” and local government approval would be conditioned on this analysis. The bill would turn Oregon’s land use system into an additional regulator of environmental and public health and would render many industrial areas not far from neighborhoods, parks and other “sensitive uses” economically infeasible if not unusable. OBI is opposing this bill along with the League of Oregon Cities and a wide range of stakeholders.
Transportation Package: The 2025 Joint Transportation Committee is picking up where last year’s interim work groups left off in exploring a potential transportation package of unclear funding, size, and content. Thus far, hearings have been heavy on ODOT background briefings and context setting. ODOT gave a 64 slide presentation on a variety projects funded through the 2017 package. Of the 27 projects listed in the presentation, only four came in at or under budget. Most cost overruns were not marginal or due to inflation. For example, a project to add auxiliary lanes to Highway 217 was budgeted at $98 million. It remains incomplete and is now estimated to cost $174 million, an increase ODOT attributes vaguely to “changes in environmental permitting, unanticipated conditions during construction, and project management challenges.”
Recycling Rules Comments: On Jan. 31, OBI and other industry partners submitted comments on the Circular Action Alliance’s (CAA) third draft program plan to implement Oregon’s Plastic Pollution and Recycling Modernization Act (RMA), which passed in 2021. The comments acknowledged this draft of the plan contained more definitive information about the costs associated with the RMA and contained provisions allowing CAA more flexibility to implement the RMA. Cost estimates have come down (a bit), and there is some additional certainty. However, the plan still lacks definitions on many types of covered materials, and its extremely tight compliance timeline is causing reporting difficulties. CAA is hosting a webinar to provide additional information about what to expect as the program becomes operational later this year. Producers who are interested in the webinar can get more information about it here.
Attempted Insurance Change: On Feb. 5, the Senate Committee on Judiciary will hold its initial public hearing on SB 174, which would allow individuals to file lawsuits against insurance companies under Oregon’s Unlawful Trade Practices Act. OBI and fellow business stakeholders killed a similar effort during the 2023 session (and in prior sessions). This year’s effort is similar to past years’ attempts in that it would authorize private lawsuits against insurers under the UTPA for alleged violations of the insurance code. Unfortunately, this year’s draft is more expansive in that it also would allow the court to impose equitable remedies in addition to remedies available under the UTPA. OBI and other business stakeholders are working to stop this bill from passing this session so that insurance premiums do not skyrocket in this state as they have in states that have passed similar laws, including Florida and Washington.
State Investment Restrictions: On Jan. 28, OBI submitted testimony in opposition to HB 2200, the Oregon State Treasury’s bill that would eventually require the Oregon Investment Council (OIC) to divest from carbon intensive investments and reach carbon neutrality by 2050. The bill would distract the OIC from its mission of maximizing the value of the state’s investment portfolio, and current law already allows the OIC flexibility to divest from investments it deems too risky. Further, the bill lacks definition on what constitutes a carbon-intensive investment and could broadly limit the OIC’s ability to make investments in the future. This bill could harm Oregon’s public finances.
Simplifying Taxes: On Jan. 30, OBI testified in support of HB 2110, which would require local governments that levy income taxes to conform to the definitions and rules prescribed by the Oregon tax code. Contrary to arguments made by local government stakeholders, the bill would not preempt or repeal current or future income taxes levied by local governments. Instead, HB 2110 would simply mitigate the complexity created by having multiple jurisdictions taxing the same entity. If local governments conform to definitions in Oregon tax law, compliance will be easier. This problem has grown substantially in recent years due to the increased number of income taxes imposed by local governments. While HB 2110 would not reduce the growing tax burden borne by Oregon’s businesses, it would reduce compliance costs.
Leave Fixes Advance: Last week, OBI testified in support of SB 69 and the -2 amendment in the Senate Committee on Labor and Business. The bill passed unanimously and now heads to the full Senate. The bill and amendment are the result of a negotiated agreement after several months of workgroup meetings. While others at the table wanted significant expansions to Oregon’s leave laws, OBI argued that employers and employees need relief from the constant changes.
Paid Leave Oregon Penalties: The Senate Committee on Labor and Business is also considering SB 859, which would align Paid Leave Oregon with unemployment insurance statutes and allow the Oregon Employment Department to waive or reduce penalties and other debts related to Paid Leave Oregon contributions. The bill applies to contributions dating back to the start of the Paid Leave Oregon program in 2023. This has been a major issue and one OBI has repeatedly urged the employment department to address.
UI Claims: On Feb. 5, the House Committee on Labor and Workplace Standards will have a public hearing on HB 2125, which would create a new basis for workers to claim unemployment insurance benefits for severe weather. The bill specifically states that the employment department will waive the waiting week for UI claims related to severe weather. However, there is no reference to severe weather in existing UI statutes or administrative rules. OBI is working to clarify what impact the bill would have. OBI plans to testify about potential impacts for employers and the UI trust fund.
Trump Announces Tariffs on Mexico, Canada, China
What’s happening? During his campaign, President Trump threatened to impose wide-ranging tariffs. Those threats have begun to materialize. On Feb. 1, Trump announced that a 25% tariff on goods imported into the U.S. from Canada and Mexico would go into effect, as would a 10% tariff on goods imported into the U.S. from China. (Note: Canadian oil will see a 10% tariff, aligning that particular Canadian good to other expected oil and gas tariffs. likely to match the broader tariff on oil and gas the Trump administration has announced.)
On Monday, Feb. 3, Mexican President Claudia Sheinbaum said that she had struck a deal with the Trump administration to delay the imposition of tariffs for a month after reaching agreements on border security and drug trafficking. Tariffs on China and Canada are still scheduled to take effect Tuesday, Feb. 4.
In addition to these geographically based tariffs, the administration has announced that it would impose product-specific tariffs on semiconductor chips and related goods, pharmaceuticals, steel, aluminum, oil and gas. There is also discussion of possible future tariffs on products imported from the European Union.
Why it matters. These tariffs are of heightened interest to businesses in Oregon, a trade-dependent state with a significant manufacturing presence. A large portion of the state’s GDP is related to the semiconductor chip industry.
What’s next? This issue is evolving rapidly, and we will try to keep you up to date. We are receiving timely updates from our national partners, the U.S. Chamber of Commerce, the National Association of Manufacturers and the National Retail Federation. In addition, OBI is planning a half-day summit to be held this spring on the topic of trade, at which we’ll dig further into key issues and how they do or may affect Oregon’s economy.
Read more. Here are a few links to some current stories or news sites that are tracking this issue as it evolves:
- Trump Unveils Tariffs: President Donald Trump announced broad tariffs Feb. 1 on major US trading partners Canada, Mexico and China, claiming a “major threat” from illegal immigration and drugs — a move that sparked promises of retaliation (Yahoo News).
- Canada Announces Tariffs: Canada will retaliate against President Donald Trump’s new tariffs with 25% levies on a raft of U.S. imports, Prime Minister Justin Trudeau said Feb. 1, warning Americans that Trump’s actions would have real consequences for them (Reuters).
- Mexico Vows Retaliation: Mexican President Claudia Sheinbaum on Feb. 1 ordered retaliatory tariffs in response to the U.S. decision to slap 25% tariffs on all goods coming from Mexico, as a trade war broke out between the two neighbors (Reuters).
- Mexico Tariffs Paused: President Claudia Sheinbaum of Mexico struck a deal with the Trump administration to delay stiff tariffs, which were set to take effect on Feb. 4, for a month as the two countries reached a series of agreements on border security. Ms. Sheinbaum agreed to deploy 10,000 troops, who President Trump said would be designated to stop the flow of migrants and illegal drugs across the U.S.-Mexico border (The New York Times).
- Chamber Memo: The U.S. Chamber of Commerce has issued a state-of-play memo outlining specifics. You can read it here.
Transparency Act Reporting Voluntary Despite Court Ruling
What happened: On Jan. 23, the U.S. Supreme Court issued an order granting the U.S. government’s motion to stay a nationwide injunction preventing the Corporate Transparency Act from taking effect. The injunction had been issued by a federal district court in Texas.
What is the CTA: The Corporate Transparency Act is an anti-money laundering law that requires small businesses to report ownership information to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).
However: The Supreme Court’s order does not affect a separate issued against the Corporate Transparency Act’s reporting rules issued by a federal judge in Texas. As a result, businesses are not required to report ownership information to FinCEN. They may do so voluntarily.
Meanwhile: The National Federation of Independent Business, which has filed a lawsuit challenging the Corporate Transparency Act, notes that lower federal courts must still determine the law’s constitutionality. Congress is considering legislation that would repeal the law and relieve small businesses of ownership reporting requirements.
Notable News
Kotek Order vs. Agency Analysis: Gov. Tina Kotek issued an executive order last month that will make highway projects more expensive, reduce bidding competition, and benefit a relatively small number of workers—who happen to be strong supporters of hers—at the expense of many Oregonians. Who says so? Kotek’s own agency, the Oregon Department of Transportation (Willamette Week).
Oregon Test Results: In the latest confirmation that extended pandemic-era school closures took a huge toll on a generation of young Oregonians, new federal test results show the state’s middle and elementary students still lag far behind in reading and math (The Oregonian).
Graduation Rate: About 82% of Oregon students who entered high school four years ago graduated this year, a slight uptick from the previous year’s rate and the second best rate in state history (The Oregonian).
Homeless Camping Suit: A disability rights advocacy group has filed a lawsuit to halt the city of Grants Pass from closing one of two sanctioned homeless camps and restricting the hours of the other. The new suit is the first major case following last summer’s U.S. Supreme Court ruling that found public camping restrictions in Grants Pass did not constitute “cruel and unusual punishment” (The Oregonian).
Nurse Staffing Law: Oregon lawmakers in 2023 passed a hospital staffing law aimed at curbing nurse burnout, slowing turnover and ensuring safer patient care. The law was expected to stabilize the state’s health care system strained by years of understaffing and high patient loads. But more than a year after the law began to take effect, nearly 5,000 of Providence hospital nurses are on a strike now entering its fourth week, largely over the very issues the law was supposed to fix (The Oregonian).
BPA Energy Debate: A debate is raging in Pacific Northwest energy circles, with potentially billions in residential, commercial and industrial utility bill savings at stake. The debate pits a range of stakeholders — including Oregon’s two biggest utilities, Oregon and Washington’s four U.S. senators and renewable energy developers — against the Bonneville Power Administration, the Portland-based federal agency that sells power from 31 federal dams and a nuclear plant and that owns and manages 75% of the region’s high-voltage transmission system (Portland Business Journal).
Knight Foundation: The private foundation of Nike co-founder Phil Knight booked another year of accelerated giving in 2023 as its philanthropy expanded beyond universities and Oregon nonprofits to a presidential foundation and an antipoverty group. The Knight Foundation gave away more than $190 million in 2023, its third consecutive year of at least $150 million in philanthropic gifts (The Oregonian).
Wine Sales Decline: Oregon wine sales dropped in 2023 for the first time in at least a decade, a turn that coincided with reports of a corresponding national decline in wine demand (The Oregonian).
LUBA Halts Facility: Portland’s construction of a new water treatment plant east of Gresham hit a legal snag after a state agency overturned a key permit required for the project. Oregon’s Land Use Board of Appeals said that Multnomah County officials failed to determine whether the massive Bull Run filtration facility would adversely impact the rural area’s natural resources when it granted the city a conditional land-use permit in late 2023, according to a ruling issued Jan. 27 (The Oregonian).
Portland’s Pricey Schools: Portland Public Schools’ plan to spend up to $1.15 billion to modernize three aging high schools is far out of line with similar projects in the region, even when accounting for inflation, an independent analysis of the district’s spending plans found (The Oregonian).
Nitrate Pollution: Nitrate pollution has worsened significantly in eastern Oregon over the past decade, according to a new analysis released by the Oregon Department of Environmental Quality (The Oregonian).
Oregon Housing: Oregon needs to build about 29,500 more homes each year, mostly in the Portland region and Willamette Valley, to emerge from a housing shortage years in the making, the state’s chief economist told lawmakers Jan. 27 (Oregon Capital Chronicle).
Eggs and Regulations: Cage-free egg laws in 10 states may also be responsible for some supply disruptions and price increases. The laws set minimum space for chickens or cage-free requirements for egg-laying hens. In addition to Oregon, they’ve already gone into effect in California, Massachusetts, Nevada, Washington, Colorado and Michigan (Associated Press).
Check Out OBI’s Member Benefits
OBI offers members a range of programs that can save money or help small businesses offer benefits normally available only to much larger companies. Benefit programs include:
- HealthChoice: Helps businesses with fewer than 100 employees offer comprehensive health-care benefits through our partnership with Regence BlueCross BlueShield of Oregon.
- CompSAFE: Helps eligible companies enjoy workers’ compensation discounts through SAIF Corporation.
- Fuel Program: Helps members save fuel costs through our partnership with Ed Staub & Sons.
- ODP Business Solutions: Helps OBI members save money on office furniture, supplies and other services.
- LegalPLUS: OBI members receive 15 minutes of free legal consulting per month from Innova Legal Advisors.
Go here to learn about all of OBI’s member benefits.